BREXIT

British food firms set to increase trade with US following Brexit vote

By Douglas Yu contact

- Last updated on GMT

UK businesses may look to boost ties with the US. Photo: iStock
UK businesses may look to boost ties with the US. Photo: iStock
UK confectionery and snack businesses may look to ramp up their trade with the US in light of last week’s vote to leave the European Union.

That’s the view of some of the two dozen British food companies exhibiting at the Summer Fancy Food Show in New York City this month.

The so-called ‘Brexit’ referendum  result – when 52% of the UK voted to exit the EU - has caused concern for companies who source ingredients from Continental Europe, and for those who conduct a large amount of export business on the Continent.

Before the show, UK pavilion organizer Food & Drink Exports Association (FDEA) said: “Given the importance of the EU to the UK food and drink industry, with over 70% of our exports going to the EU in 2015, it is vital that access to this market is maintained.”

“We will be working closely with our partners and government to ensure that the interests of the food and drink sector are high on the agenda,”​ FDEA added.

Euromonitor has predicted confectionery​ and snacks​ will be among the packaged food product categories most affected by Brexit.

‘Brexit is a massive step backward’

One exhibitor in the show’s Scotland pavilion is Walkers Shortbread Ltd, manufacturer of products including shortbread and oat crackers.

Walkers has doubled its business over the past 10 years, it said, and is seeing 3% year-on-year growth on average. Exports account for around 40% of its business, which Walkers said is one of the highest export proportions among UK biscuit companies.

“Europe is a very important sector to our business,” ​managing director James N Walker told this site.

It’s our second-largest export market following the US,”​ he said. “I think Brexit is a massive step backward to the UK, and is a big disadvantage for the British food industry.

After the UK files its formal intention to leave the EU – which has not yet happened – the country will have a two-year period to negotiate a new treaty to replace the terms of EU membership. It is also possible Scotland will hold a referendum, so the country may have the opportunity to remain in or re-join the EU on its own.

Walker added his company will be flexible with its business strategies during this period.

“We have a quite a few European workers, and they’ve been able to help the company grow sustainably,”​ Walker said. “This year will be very difficult with the fluctuation of exchange rates, I’ll be really happy if company shows a growth rate of 3% or 4%.”

Looking for more US distribution

UK firms such as Walkers Shortbread and Scottish potato chip company Mackie’s Chips are looking for more distribution in the US.

Mackie’s, which manufactures 16 flavors of potato chips including scotch bonnet chili pepper, exports 15% of its products. But only 5% of its export business is in the European market, said global brand manager Rebecca Russell, adding that the company’s priority this year is building distribution in the US.

“I don’t see how Brexit immediately affects our business, but it might happen in the next a few years,” ​Russell said.

The Brexit vote may force some businesses to rethink their sourcing strategies.

A British dessert company - which launched its products in Continental Europe a year ago and declined to be identified – said it sourced its chocolate ingredients entirely from EU member Belgium.

“If Brexit affects our business dramatically in the future, we will have to look for new strategies, “ it added.

On the positive side, said the dessert business, UK goods will be cheaper and more attractive to the US as the value of sterling fell following Friday’s Brexit vote.

“Most UK businesses will probably start looking at the US market more than Europe,”​ the company added. 

Related topics: Snacks, Markets

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